Will the World Meet the Challenge of Climate Change?

Hello. I’m Richard Haass, the president of the Council on Foreign Relations, and this is Nine Questions for the World, a special limited edition podcast series. 

In each episode, you’ll be hearing me in conversation with some of the best thinkers of our time, as we ask fundamental questions about the century to come.  

For those of you who don't know, the Council on Foreign Relations or CFR is an independent, non-partisan membership organization, dedicated to informing the public about the foreign policy choices facing the United States and other countries. We're also a think tank, a publisher, and an educational institution.

Today’s episode features a conversation that took place on June 16th, 2021, with Lord Nicholas Stern, he’s Chair of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics. 

Lord Stern and I discussed  what many describe as the most pressing global issue of our time: climate change. We started with a scientific 101 on climate, and then we moved on to questions about renewable energy, emission taxes, and the prospect of building a carbon-neutral economy. We spoke several months before the COP26 gathering, which in some ways made the conversation even more relevant, as it highlights the gap between what was accomplished in Glasgow and still what needs doing.  

Enjoy the conversation. 

Richard Haass: So Lord Stern, who I'm going to call Nick because we're old friends and he prefers it and this way he can call me Richard, welcome to the Council on Foreign Relations.

Nicholas STERN: Thank you very much, Richard. It's a real pleasure to be with you and to see you again.

HAASS: Thank you. So let's start with basics, let's do a little bit of a climate change 101 because I'm not sure exactly how much background everyone has but the one thing I do know for sure is we all have less background than you. So when you use the phrase climate change what is your succinct elevator definition of the phrase?

STERN: Well, let me answer that by saying how it works. Energy comes in from the sun bounces on the Earth's surface, comes back as infrared. And there are some gases where they have molecules that oscillate at frequencies that interfere with that and those are the greenhouse gases. And it's our bad luck that CO2 is one of those. So the more CO2 we have in the atmosphere, the concentrations of course is what matters. So the more the concentrations are, the more the heat is trapped. And that's the greenhouse effect and why we call them greenhouse gases. So the more there are, concentrations, the more the heat is trapped and the higher is the temperature. And that higher temperature changes the climate. Mostly it will be wetter and rougher. So you'll have more cyclones and hurricanes. You'll have storm surges. You'll have desertification. You'll have sea-level rise. So most of the problem is through water in some shape or form or the lack of it in desertification. But of course, in some places, we're heading for extreme temperatures. Certainly, some parts of North East India, North East China not only there, we're headed for temperatures which are so high that you couldn't survive outside for more than a few hours. So whilst I say it's mostly a water story or the absence of it, it is also a question of the temperatures themselves and increasingly so.

HAASS: So let me just take an associated issue, put it out there, and hopefully we can take it off the table. What you have just said, if we had the world’s scientists and experts here, would 100% of them agree with that, 99%? To what extend now, put aside what to do about it, which is obviously highly political but the actual phenomena itself, what you have just described, to what extent is that matter of serious dispute any longer?

STERN: I don't think it is. See the process I've described is very basic physics. It's that some molecules oscillate at that frequency and that traps the heat and that pushes the temperature up. So the mechanism is really crystal clear. I think it's completely uncontroversial. Of course, how big it is, is a matter that we have to try to understand and estimate and there's some uncertainty about how big that will be. But our best science at the moment tells us that if we go on on anything like the path we're on, within 100 years or within this century we could be headed for well over three degrees centigrade increase in average global surface temperature relative to the end of the 19th century which is our usual benchmark. And of course, that's when the industrial revolution and all that burning of fossil fuels really started to kick in. It's okay to use centigrade in this illustrious audience, I hope.

HAASS: Yeah, if we can all do our plus and minus 32s times 9/5 or 5/9. I'm sure everybody listening is doing the math in their heads. 

STERN: Well over three degrees Richard, well over three degrees is huge. We haven't been at three degrees for something like 3 million years. We've been around as homosapiens for something like a quarter of a million years. Way, way outside the experience of homosapiens. It's immense and of course, there's a risk that it's still bigger, four or five degrees still, there you're going into the 10s of millions of years and just at three degrees the sea level was 10-20 meters higher than now. But of course, it's not just the sea level it's all the hurricanes and the storm surges and most of our coastal cities would be uninhabitable.

HAASS: Where are we now in terms of temperature increase compared to that preindustrial baseline? Are we about a degree higher?

STERN: Yeah, just over a degree, and in the words of Ronnie Reagan, "You ain't seen nothing yet." We're already seeing very unpleasant effects at one degree around the world. And you're seeing the disappearance of the ice sheets in much of the Arctic. You're seeing very large chunks of ice break away in the Antarctic. The snows are receding in the Himalayas and indeed the Rockies and the Andes and the glaciers are going back and then you're getting desertification. At the kind of temperatures, we're talking about, much of Southern Europe would look like the Sahara Desert. I mean these are seriously big effects we're talking about here.

HAASS: And so if we were to, to use a cliché, get our act together. If starting tomorrow the world stopped adding to climate change how much higher would we go than the degree given what's already baked into the cake, what's already in motion? To what extent, if you will, is additional climate change inevitable even if we totally transformed our behavior?

STERN: Well, look here's the definition of getting our act together, we could go to net-zero emissions as a world by mid-century. That would give us a fighting chance of holding it to 1.5 degrees centigrade. And it basically is argued at the beginning, this is the basic physics, in order to stabilize temperatures you've got to stabilize concentrations, for all the time concentrations are going up, temperatures are going up. So the earlier you stabilize the concentrations the lower the temperature at which you stabilize. So if we really, in your language, got our act together and we went at it hard, we would have a fighting chance of holding to 1.5 degrees centigrade but we really have to start now and move quickly. That means radical change, but it also means a new form of growth, consumption, living, which many of us would regard as much more attractive. Like cities where you can move and breathe and ecosystems which are robust and fruitful sounds like a good idea even if you've not heard all that much about climate change.

HAASS: But I assume that'd also be, getting ahead of ourselves a little bit but you introduced it, that there'd be many who would disagree. That they would be concerned about several things. So let me put some of the concerns that people have about climate change and what dealing with it could mean for them. There's a lot of people in the so-called developing world and India's another country saying, "Well, it's fine you mates have gotten sensitive to climate change now that you've got GDPs per capita of $50,000 whatever a year but we're at roughly $2,000 a year. We don't have this luxury. You're the ones who created the problem, now you want to solve it on our backs." What do you say to that?

STERN: The historical responsibly argument is a very serious one and it does mean that the rich world, in my view and its fairly widely shared, has an obligation to be helpful. And in the substantial way helpful to the transition to new way of doing things in other countries. That's the first part of the response. The second part of the response is that technology has moved so fast in the last 15 years or so that at least a third of the emissions occur in activities where it's already cheaper to do it differently and to do it clean and to do zero-carbon, particularly electricity. Through much of the world now zero-carbon around the clock electricity without carbon price, without subsidy, is cheaper from renewables.

HAASS: Are you talking about solar, wind, or are you talking about nuclear or some combination of the above?

STERN: I'm talking largely about solar and wind. And in India 3 cents a kW/hr now around the clock solar, the latest bids coming in. So a second part of the argument there's a tremendous amount of what we need to do is already cheaper and that's not true everywhere. It's not true across the board but it's increasingly true and perhaps in 10 years time if medical progress goes at the same rate maybe something like 2/3 or 3/4 of the emissions-related activities will be cheaper without carbon price and without subsidy. So the second part of the argument is actually it's already cheaper in big parts and then that will be true, not everywhere, not everywhere, but it would be true in much bigger parts. And the third part of the argument is that burning fossil fuels is absolutely devastating for air pollution and lives and soil pollution in other ways. Probably 10 million or so deaths a year are associated with air pollution. Some inside the house some outside the house. That's in a world where deaths per year are a bit over 50 million. The 10 million in 50 million or 50 million-plus associated with air pollution, that's a very big deal. Now not all air pollution comes from burning fossil fuels but a big part of it does. And of course, you degrade your biodiversity with all sorts of consequences there. So the third part of the argument is it's not just the ordinary calculated costs, it's those other costs which are so important. And in India, a country where I've been working since 1974 and lived for long periods and love, nine of the ten most polluted cities in the world are in India.

HAASS: It's interesting just to point out, as an aside, that before this past year with the pandemic, virtually all, I think six of the top seven causes of death worldwide were not infectious disease. They were all noncommunicable diseases, many of which had some linkage to what it is we're talking about. I want to drill down one thing you said because now everybody may not follow it, what you're basically saying is, because of renewables it's now possible to essentially have our cake and eat it. Have economic growth and have cheaper energy sources and you said without a carbon price. Because a lot of the conversation has also been about putting a price on carbon in order to shape behavior. If we make carbon more expensive essentially to emit it then it will channel behavior and direction say it will accelerate the move say to renewables. And what you're essentially saying is, I hear you, is the technology may in some ways be solving that issue for us that we won't have to incentives people, they'll simply look at comparative costs of various energy sources and say, "You'd have to be stupid to use fossil fuels if you have a cheaper option from the sun."

STERN: I mean Thomas Edison saw that coming but the big part of the story is that but I don't want to go over the top on that one because there are areas steel, cement, aviation, where that's not yet true and it is likely to be quite a long time before it's true. But roughly speaking we need to quadruple the electric power in the world between now and 2050 and we need to make it all zero carbon by 2040. And if we do that we can hang up off it a tremendous amount, the big majority of transport, and we can hang off it, all that zero-carbon electricity, a lot of heating. But there will be some parts for quite some time, aviation, steel, cement, which will probably be quite a lot more expensive doing it zero carbon. Even though we actually can see how to do it, but if we get really cheap zero-carbon electricity we use some of it to make hydrogen. Using water and electricity you can make the hydrogen then you can use the hydrogen. We can solve a tremendous amount of the problems in those areas which are not yet cheaper. But that doesn't mean that you don't need a carbon price.

HAASS: Why don't you then say something about what a carbon price is and how it might actually operate in reality.

STERN: Well, excuse me for reverting to economics professor at LSE just for a moment. But we have market mechanisms which are really efficient and put all sorts of things through on the whole because they flag the cost. If you're facing something that's very costly to produce you see that high price and you economize in relation to that high price. You're influenced by that high price and if its a meal then you're paying for the people who serve and cook the meal, you're paying for the space, you're paying for the food, you're paying for the fuel that goes into cooking then, and you expect to pay the costs of what you're demanding and you react to prices. So the price mechanism is a very powerful phenomenon in the allocation of resources but if it's going to be a good allocator of resources it's got to reflect the costs that are involved in the production. If in the production process you do things like emit carbon or emit air pollution which are very damaging to other people, and they are, then you are not paying the cost of what you do. You're getting it too cheap in relation to the cost of what you're consuming and we need disincentives for that and that's what the carbon price does. It tries to face people with the real costs of what they're doing. So the carbon price is actually a phenomenon for people who think that we're going to have to try to make our markets work well and if we do then they'll allocate resources much better.

HAASS: What about using existing or potential trade agreements to do just that? I for example suggested that something like what used to be the trans-pacific partnership now this CPTPP, that they should have that type of a rule, that if you want to export to them the price of what you want to send to them would be modified depending upon everything from how much energy you used to produce it to how much energy the item might consume in its lifespan. What about that idea, essentially use trade to be a climate change influencing vehicle?

STERN: Well, we need shared action because this is a world problem. The concentrations of the greenhouse gases in the atmosphere are a global phenomenon. It doesn't matter whether it comes from Johannesburg or Beijing or Memphis, Tennessee or wherever it's still the carbon in the atmosphere. So we have to try to discourage it everywhere and that's the spirit of your question. The IMF has been pursuing recently, and I think it's a very sensible idea, is the idea of a minimum price for carbon. You try to get countries across the world to agree and my instincts are to go for agreement and collaboration. It's remarkable now, how much there is agreement and collaboration about the need to do things, about the importance of bringing through new technologies. So the first part of the reply Richard is before we get too aggressive on the border things, let's see what we can do to work together on technology, policy, and so on. You know, China is putting in place carbon markets but there may well be some places which are not ready to do that. I mean shame on them. I don't think they understand that would reflect a misunderstanding of the problems and the opportunity, but in that case, there is an argument, a correct argument in my view, for a tariff that reflects the extra cost of the damage done in the production process which is not reflected in the price that they're selling to you at. Now that actually applies only to very few products in any degree of importance. They are what we call energy-intensive trade-exposed products. I mean think about steel. Steel is actually most at fault, of those. Cement's important too but actually cements so heavy that you don't move so much of it about. But there's some other places, there's some sorts of plastics and so on, there are four or five, six industries for which this is important. And my instincts would be to focus any border adjustment on those very few industries which are important. And on the whole, people don't relocate their production in response to environment or regulation, or policies. Why not? Because when you choose where to produce you think about the availability of skilled labor. Does the infrastructure work? Does the electricity stay on? Is the government predatory or not? Those are the kinds of things you think about when you think about the location of production. And all the data shows that actually, the regulatory or the carbon tax side of things from a prospective environment, don't make that much difference on location decisions. But there are some and I think steel is an important example. But I wouldn't let it escalate too widely, let's just focus on the one or two things where it really counts.

HAASS: Let me give you another case where there may be an argument for tariffs which is the case of Brazil. Brazil oversees this custodian for a large percentage of the Amazon rainforest. Deforestation has not just continued but many of these cases has accelerated. What about the idea, I have argued it, I'll put my cards on the table, that if Brazil won't act responsibly, its irresponsible behavior is not just their problem but it's our problem. Again climate change doesn't respect borders. And we'll help them act responsibly if they want to. We could build up their capacities to prevent deforestation but if they refuse then there should be a price, and we should basically impose a tariff on Brazilian exports in order to discourage them from continuing to let the Amazon be developed. What's your instinct about that?

STERN: I would agree with that, but as in my earlier answer the first thing is to try to do it collaboratively.

HAASS: You're a nicer guy than I am, clearly.

STERN: Yeah, you know people who have just done first-year economics they tend to believe too heavily in the models that everybody acts only very narrowly in their own self-interest. I actually think, on this kind of issue, people are ready to get together, and there's evidence that they are getting together. The first thing is the collaborative story but, and it's a big “but” if you cut down the rainforest to produce your soya, if you cut down the rainforest to expand the range for your beef cattle, then your soya and your beef are actually being sold far too cheaply because you're imposing a great cost on the world by cutting down the forests to produce the soya and to produce the beef. So just as in the case, we're discussing steel, there's a very powerful argument for tariffs if the stuff is produced that way. And actually, it's not that hard to tell whether or not in these days of satellites and tracking things and supermarkets which tell you where your lettuce comes from. It is actually possible to do that. And I do think that what's happening now with the Amazon forest is just terrible and it's climate change of course big time. But it's also the biodiversity of the world. It's also the rainfall pacts. Now if the Amazon starts to collapse, Sao Paulo turns into a desert. It's madness from the point of view of narrow Brazilian self-interest as well. So I think that in these kinds of cases the type of action you've described is totally justifiable. I mean, I said at the beginning and I repeat it again, the collaborative solution, "What can we do to help? How can we invest in the Amazon?” It's in all our interests if we do. That should be on the table as well.

HAASS: So, Nick, we've been talking for 25 minutes and there was an over/under in Las Vegas about how long we could go without mentioning the word Paris and we just defied the oddsmakers. We've gone on for 25 minutes and we haven't mentioned the Paris Accords. So let me be provocative here, is that because they're really not that significant? That Paris is less the driver of climate action so much as the reflection of national decisions about their own climate and energy trajectories? So we really think of Paris less as the engine and more as the caboose. What do you think about that?

STERN: I think it's both. I mean if you look back at Paris and you asked how technology has accelerated as a result of Paris I think you'd have to come to the conclusion that it's a lot. The figure that I gave of something like a quarter or a third of emissions occurring now in places where it's actually cheaper to do it net-zero and clean, a lot of that's emerged since Paris. It started before Paris, of course it did, but it's emerged since Paris. Why? Because those people that make investments have a reasonable time horizon. They're investing for 10, 20 years. They're asking where the world is going and Paris I think was quite a signal of where the world is going. They saw the virtual unanimity in Paris, that everybody had signed up. So I do think that Paris has a signal of where the world was going and is a signal that countries are ready to collaborate, it was very powerful. Even though there's no formal enforcement mechanism. There's no police force on Mars that's going to swoop in and knock people around if they don't observe their commitments. The signal about what people should do, the signal about what was possible, the signal about what was attractive and desirable, the signal about where we're going, I think was very important in Paris. And it's come to be a bit more than that because we've had two very important court cases in Europe in these last few months. One was when the German courts told the German government that their action on climate change, that they were proposing, was nowhere near strong enough and the German courts invoked Paris as a treaty that the German government had signed. And the Dutch courts in the last few weeks ruled strongly against Shell and told them that their plans for reducing emissions were nowhere near strong enough and referred to Paris in making that statement. So I said there's no call from Mars that's going to impose this international treaty but what's remarkable is some of the country courts are starting to do that.

HAASS: So, Nick, let me ask you a few more questions then I'll open it up. We talked before about a degree of climate change, one degree plus is already here, it's already having the effects. These storms, both the severity and frequency, we're seeing an increase in global migration because of water shortages and desertification, fires are horrific, different disease patterns. Anyhow, lots of effects. And one of the effects is obviously low-lying areas and countries are particularly vulnerable. We've been talking up to now about so-called mitigation, ways of slowing or stopping climate change but let's turn for a second to adaptation. To the challenge of dealing with climate change that it's too late to prevent, it's already with us. A global fund was set up to help out countries that hasn't been, shall we say, adequately funded. What is your sense about the present future or all of what's called adaptation?

STERN: It's extremely important. It's under appreciated and under-invested. So much of the world's cities are built on flood plains. London, the city where I was born and grew up, is on a flood plain. And the kinds of temperature increases that we're talking about, even 1.5 and two degrees, and let's hope we keep to that. But even at those levels the challenge of adaptation and resilience is going to be intense. Now the hurricanes in the Gulf of Mexico and of course on the East coast of the United States, they're going to get more intense. You have to prepare for that and if you're talking about desertification you have to prepare for that. Now if you're talking about managing the water flows off the Himalayas a few million people depend on the rivers coming off the Himalayas. I mean if you go around the Yellow River and the Yangtze in China and round to the Mekong and the Ganges and the Indus, those really big rivers of the world serving billions of people come from the Himalayas where it's the snows and the ice that hold the water. If they stop holding the water, actually rainfalls going to go up, you're going to get unmanageable torrents and landslides in the rainy season and you're going to get deep, deep droughts in because the flow off the snows and ices is not coming because they're not there. Right across all sorts of ways adaptation is going to be important. Now the good news is there's quite a lot we can do that's mitigation, reducing emissions, adaptation, and development all wrapped up together. Not all of adaptations like that, but a lot of it is. If you think on the mangroves, now the mangroves protect you from storm surges. The mangroves help the fish and that's quite obviously the incomes of fishermen and those that like fish. That the tigers in India, around the Bay of Bengal, they're attracted by the mangroves and tourists come to see the tigers, and the mangroves capture the carbon. It's all of development, resilience, adaptation put together. Go to somewhere else public transport is good adaptation, mitigation, and resilience. Decentralized solar so that you're not dependent on the grid, that's resilience, development, mitigation put together. So a lot, if we're smart, a tremendous amount of what we can do, actually puts those things together, but not all of it. Things like early warning systems are enormously important. Things like seawalls are going to be enormously important.

HAASS: But also potentially things like zoning, insurance policies, relocation because it may simply be people who have been living in low-lying areas that usually get flooded or vulnerable to storms, people who live on the edge of a large forest, this may no longer be viable moving forward. And governments I would think that part of the cost of climate change is going to be coming up with adaptation strategies that essentially take into account the climate change that's already with us.

STERN: Adaptation can be done in the kind of ways I described but some of it's going to be people moving and actually, that's already with us. Some of the problems in Syria were associated with desertification and people moving. Not all of them of course. We managed to make those problems in Syria pretty horrible in other ways but there was a climate change element there. In the Sudan Darfur, there are already climate refugees. If we got anywhere near three degrees, and we're heading for at least that all over unless we change our ways, hundreds of millions or billions would have to move and if we've learnt anything from history very big population movements carry very big risks of conflict. And you couldn't turn off the reasons for the conflict. So there are two lessons there, you're going to have to deal with the movement of people, you have to, but it's much, much wiser to avoid the movement of people on the kind of scale we risk.

HAASS: Nick, let me introduce one last part of the climate change debate. In some ways it's among the more controversial which is if everything you're talking about continues to happen, the world does not act as you and I might agree it could and should to deal with this growing problem, so we get to one and a half, we get to two degrees, we get to two and a half degrees on that increase with all the consequences that you've been describing, what about the idea of geo-engineering? What about where we basically say, "We can't come together to mitigate this for whatever set of reasons, shortsightedness, selfishness, what have you. It's gotten so severe that we've got to look at ways of, if you will, interfering with the planet in a conscious way to reverse what is going on." What is your view about the potential for geoengineering and to what extent as some people are worried about to even talk about it, takes the pressure off? That if people think there's a "technological solution" they'll be less likely to do a lot of the steps that you've been advocating.

STERN: I think the risks are so great that we have to look forward, we have to think about these things but I prefer to use the idea of carbon removal. And the trouble about geoengineering is you send quite big reflectors up into the atmosphere or you fire dirt up there to stop stuff, the solar energy, coming in. I worry deeply about those kinds of things because we really don't know what comes with it. We really don't know. And there could be all kinds of collateral damage if you use the term. And it doesn't stop the acidification of the oceans and so on, so I much prefer to think about carbon removal. And there are a bunch of ways that carbon removal can happen like trees. Like, restoring degraded land can be very important in all this and that's a classic example of development, mitigation, and adaptation coming together is restoring degrading land. You make it productive, you make yourself more resilient against the bad weather, and you capture the carbon in the soil. Those black soils, right, that's the soils with carbon and they're the ones that are fertile. So carbon removal, natural capital is very important. Of course natural capital comes with all sorts of other benefits as well, like if we have trees on our hills it means you have less landslides, we manage our watersheds as so on. And of course, the biodiversity part of the story is very important. So carbon removal is where I would focus. Geoengineering makes me worry if it's about firing stuff up there you don't understand. But carbon removal we do understand and actually a lot of smart guys, and I'm an economist, not an engineer but I've got a lot of friends who are engineers working on direct air catcher. And probably the cost of that will come down to a couple of hundred dollars a ton before not too long. Now that's a high carbon price but at some point, you might be willing to pay that given the dangers that are avoided. You can scatter various forms of rock limestone, that can improve productivity of soil and also absorb carbon. You can burn bio and do carbon capture. There are a range of carbon removal stories which I think we should be pursuing, and we're likely to need. But geoengineering if it's firing up muck or firing up all sorts of complicated mirrors, that makes me a bit nervous.

HAASS: So I listened to you, and my last question, you come off as an optimist so my question is, are you an optimist because you're really an optimist, because you're one of the most analytical people I know, because this is as much of a political issue as anything else? Are you an optimist because you couldn't get up in the morning otherwise and do what it is you do?

STERN: Look, I've got five grandchildren aged five to 10 so you have to think about the future but whether or not you've got grandchildren you should think about responsibilities to future generations and justice and that's a large part of what motivates us, justice between generations, justice amongst people in the world particularly the poorest people in the world who suffer the most in climate change and who contributed the least. So that's a big part of what motivates me. But actually, the second part of what motivates me is seeing what we can do and seeing how much sense it makes. I do think, mate, I was born and brought up in London, I've worked in India and China and Africa and many other countries of the world, cities where you can move and breathe and ecosystems which are robust and fruitful really are good ideas. So I'm very optimistic about what we can do. I worry deeply, deeply about what we will do.

HAASS: The stakes could not be bigger. Thank you, sir. 

STERN: Thank you, Richard, 

HAASS: Be well.

Thank you for joining us. I hope you enjoyed the conversation.

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